Learning Tech hikes margin forecasts after 'strong' year for revenue

Learning Technologies Group reported “strong” organic revenue growth of 8% in its full-year results on Tuesday, as its total revenue rose 95% to £258.2m.

The AIM-traded learning and talent management technology company said its content and services operations recovered strongly with organic growth of 25%, and was now back to 2019 levels as expected.

Software and platforms, meanwhile, saw organic growth of 2%, and 17% excluding PeopleFluent, continuing its track record of high-margin growth.

Learning Technologies said the decline in PeopleFluent was “more than offset” by organic growth in the rest of the segment, including strong contributions from Rustici and Breezy.

The board described “excellent” profit growth, as a result of the strong organic revenue growth, the contribution from recent acquisitions, and a continued focus on EBIT margin improvement as the group expanded.

Adjusted EBIT was up 36% at £54.8m, and adjusted diluted earnings per share were 17% firmer at 5.01p.

Its adjusted EBIT margin narrowed to 21.2% from 30.5%, however, and its statutory profit before tax slipped to £9.3m from £13.5m.

The directors said the fall in group margins was driven by a change in revenue mix from acquisitions.

Its net debt totalled £141.4m at the end of the year on 31 December, swinging from net cash of £70.2m at the end of 2020, while the company described “good” cash generation, reporting it was on target for leverage of about 1.0x by the end of 2022.

The board proposed a final dividend of 0.7p, up 40% year-on-year, leading to a full-year distribution of 1.0p - an increase of 33%.

Looking ahead, Learning Technologies said trading in the first quarter was “strong”, in line with management expectations.

It upgraded its margin expectations for 2022 after it progressed with the integration of GP Strategies ahead of plan.

Following the “transformational” acquisition of GP Strategies, the company said it had opportunities for “significant” margin enhancement and cross-selling, and increased reach in the $100bn addressable market in digital learning and talent management.

While mindful of the current macroeconomic environment, the board reported strong business momentum into the new financial year and a “robust” balance sheet, supporting further software company acquisitions, and underpinning its confidence of “significant progress” in 2022.

“2021 was another exciting and successful year for LTG - our strong organic revenue growth reflects the pressing and growing need for organisations to recruit, train, motivate and retain talent and LTG's ability to meet these demands,” said chief executive officer Jonathan Satchell.

“We have also continued our track record of improving the operating model and performance of businesses we acquire.”

Satchell said the “transformational” acquisition of GP Strategies was progressing ahead of plan, enabling the company to upgrade its margin expectations for 2022.

“The enlarged group provides a platform to capture a greater proportion of the $100bn and growing addressable market in digital learning and talent management.

“Following the acquisition we have a deeper offering to serve a global customer base facing greater complexity and change, creating further margin enhancement and cross-sell opportunities for LTG.”

At 1018 BST, shares in Learning Technologies Group were up 5.48% at 138.5p.